Signet Jewelers Acquires Zales in $900 Million DealBy: Brian Powell - February 19, 2014
Much hubbub has been made lately concerning the return of monopolies in the US capitalist structure. First, there was the news that Comcast was buying Time Warner in a $45.2 billion deal. Then, there were rumors that Apple was seeking to purchase or merge with Tesla. And now, in perhaps the most nefarious merger of all (at least for hopeless romantics and mindless dupes), Signet Jewelers has announced that it will purchase Zales Corp. in a deal worth roughly $900 million.
Signet Jewelers is based out of Bermuda and operates more than 1,400 stores in the US under the names of Kay Jewelers and Jared The Galleria of Jewelry. Along with those 1,400 storefronts, Signet also operates 500 more stores in the United Kingdom.
With its acquisition of Zales Corp., Signet will take control of 1,680 stores in North America. Those stores include Zales, Gordon’s, People’s, and other, smaller outlets.
While the deal is still to be approved by the stockholders of Zales Corp., the logistics of the deal have already been determined. Signet will pay $21 per share of Zales stock, a 41 percent mark-up on Zales $14.91 closing market-price on Tuesday.
The deal will total $1.4 billion. However, Signet will have to pay off approximately $500 million in debt Zales suffered in the wake of a 2009 liquidity crisis. While this figure seems quite large, it could have been worse. Zales recently recorded its highest profits since 2007, earning $10 million in income.
“This transformational acquisition further diversifies our businesses and extends our international footprint, opening the door to greater growth and innovation across the enterprise.The addition of Zales to the Signet family is consistent with our long-term growth strategy and leverages our combined operating expertise to create better choices for our customers, new opportunities for our employees, and makes us a more attractive partner to our vendors. In addition, it allows us to better optimize our balance sheet, creating long-term value for our shareholders,” stated Signet CEO Mike Barnes.
Once completed, the deal will make Signet the owner of 16 percent of specialty jewelry sales in the United States.
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